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<p>Tip of the month</p>
<h1>The Smart Bonus Plan</h1>
<p>One of the most often asked questions is, "what's the best way to set up a bonus plan?". There are several ways to create a bonus plan, however, very few create a win win result. We suggest that you look at three important elements.</p>
<ol>
<li>What do you want the bonus to encourage and reward?
<li>Is the bonus easy for the team to understand?
<li>Can your practice afford it?
</ol>
<p>A bonus plan can reward individual effort, production goals, number of new patients, or any other practice element you want to encourage. While it is important to reward your team fro the efforts they have made to improve your practice, you still run the risk of paying a bonus when you do not have the cash. We have seen situations where the doctor is paying out a bonus and is unable to take his/her own compensation! The best bonus is based on practice profit and requires that the doctor be comfortable with the concept of "open book" management. This means the doctor will determine, using historical data and projections of future expenses, the revenue or "break even dollars" needed to pay the monthly overhead including doctor's compensation. This total dollar amount of the required revenue (not the breakdown of expenses) will be shown to the team. When the practice collects over the the "break even" revenue, the team shares the profit. The percentage the team receives of the profit is usually between 10% and 25% and depends on the individual practice's history and profitability.</p>
<p>We strongly recommend that the team is shown examples of how the bonus is calculated from the recent past history of the practice. Once everyone understands the formula, begin the bonus plan. Have each team member calculate the bonus the first month and then rotate calculation to an individual team member monthly. The team will be more accountable for understanding how the bonus works if you take this step. The most important role the doctor can play is helping the team understand how each person contributes to the cash flow even if their job responsibility does not include collections.</p>
<p>For more information,<br>
please contact <b><a href="mailto:info@mosaicmanagementgroup.com">MOSAIC</a> </b>Management Group.</p>
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